The Phoenix Community project is more than just a real estate development; it’s a transformative initiative designed to address critical social needs while offering significant financial benefits to investors. Located in a Columbus, Ohio Opportunity Zone, this project aims to break the cycle of incarceration and homelessness, demonstrating how impact investing can create both social and economic value.

Addressing Critical Community Needs

The Phoenix Community directly addresses the challenges faced by formerly incarcerated individuals, a population significantly more likely to experience homelessness. Key statistics highlight the urgent need for this project:

• Homelessness Risk: People who have been incarcerated are up to 13 times more likely to experience homelessness compared to the general public.
• Unemployment: Pre-pandemic, the unemployment rate among formerly incarcerated individuals was 27 percent.
• Community Statistics: The project is located in a census tract with a median family income of $33,162, a poverty rate of 14.3%, and a minority population of 82.7%, significantly higher than the Columbus MSA averages.

This project, born from a partnership between Opportunity Zone Development Group (OZDG) and the faith-based nonprofit Nothing Into Something Real Estate, Inc. (NISRE), aims to combat these issues by providing:

• Transitional Housing: 50 beds for formerly incarcerated individuals, serving an estimated 70-100 people annually.
• Support Services: On-site services provided by NISRE to address homelessness, unemployment, and reduce recidivism.
• Job Creation: 20 jobs created for restored citizens and support for 40 full-time non-profit jobs.
• Non-Profit Support: 1,500 square feet of new office space for NISRE.

Financial Benefits for Investors

The Phoenix Community offers a compelling financial proposition, leveraging Opportunity Zone incentives:

• Capital Gains Tax Deferral: Defer both state and federal capital gains taxes until 2027.
• Ohio State Tax Credit: Earn a 10% Ohio State Tax Credit in the first year of investment.
• Distributions: Begin receiving distributions starting in 2025.
• Capital Gains Settlement: Plan to settle deferred capital gains in 2027 using a cash-out refinance strategy.
• Tax-Free Exit: Potentially exit the investment tax-free after a 10-year holding period.
• Targeted Returns: Aim for a 15% Internal Rate of Return (IRR), with the potential to double your investment.
• Enhanced Returns with OZ Benefits: Leverage Opportunity Zone benefits to achieve a projected 2.6x return on equity, potentially earning $3.1 million in benefits on a $4.5 million equity investment.
• Capital Stack: OZDG made a 10-year $3 million OZ equity investment, and 3 CDFI’s provided a 2.8 million dollar loan.

The Impact of Opportunity Zone Financing

As Andrew Doup of Kegler Brown Hill + Ritter stated, “This social impact project simply would not have closed but for OZDG’s innovative approach to Opportunity Zones.” The project’s success is attributed to:

• OZDG’s $3 million OZ equity investment, which was crucial for securing additional financing.
• The collaboration with Community Development Financial Institutions (CDFIs) like IFF, Finance Fund Capital Corporation, and the Affordable Housing Trust for Columbus and Franklin County, which provided a $2.8 million loan.
• Ohio’s state tax credit for OZ investments.
• The project’s ability to advance without Low Income Housing Tax Credits.

Investing in Transformation

The Phoenix Community represents a model for how Opportunity Fund managers can create investments that support underserved communities while achieving strong financial returns. By partnering with mission-aligned nonprofits and leveraging OZ incentives, OZDG and NISRE are demonstrating the potential for scalable, community-centered projects nationwide.

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Contact OZDG today to leverage your capital gains for profit and make a lasting difference with the Phoenix Project.

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